Promoter v. Co-Promoter in RERA
Maharashtra Real Estate Regulatory Authority
The Maharashtra Real Estate Regulatory Authority has, by its Circular Nos. 12/2017 and 13/2017 dated 4th December, 2017, replaced its previous Order dated 11th May, 2017 wherein the Regulatory Authority had defined the term “Co-Promoter” of a Real Estate Project.
Definition of Co-Promoter under the Order No. Maha-RERA/LA/32/2017:
“Co-Promoter means and includes any person(s) or organisation(s), which, under any agreement or arrangement with the promoter of the real estate project is entitled to a share of total revenue which is generated from the sale of apartments or share of the total area developed in the real estate project. The liabilities of such Co-Promoters shall be as per the agreement or arrangement with the Promoters, however for withdrawal from designated Bank Account, they shall be at par with the Promoter of the Real Estate Project.”
Writ Petition Challenging the Co-Promoter Order:
The Co-Promoter Order had been challenged in the Bombay High Court by Mr. Ismail Ibrahim Patel along with six others via Writ Petition No. 2773 of 2017 against the State of Maharashtra, Regulatory Authority, UOI and Shiv Krupa Enterprise.
Grounds for Challenge:
1.The RERA Act does not define the term “Co-Promoter” but defines the word “Promoter” under Section 2(zk) of the Act.
2.The Regulatory Authority of a state is not empowered under Regulation No. 38 of the Maharashtra Real Estate Regulatory Authority (General) Regulations 2017 to coin a new definition of “Promoter” and notify the same in the absence of any statutory authority under the said Act.
3.The definition of “Co-Promoter” only adds confusion amongst the stakeholders.
Contentions by the Respondent:
The Counsel for the respondent contended that the Order previously passed was only to give a further clarification on the term “Promoter” laid down under Section 2(zk) of the Act.
The Advocate-General on behalf of the Secretary of the Maha-RERA prayed for withdrawal of the Order and replacing it, with effect from 11th May, 2017.
Disposing the writ petition, the court permitted the Maharashtra Regulatory Authority to withdraw the Co-Promoter Order and replace it within a period of three 3 weeks from 14th November, 2017, having an effect from 11th May, 2017.
The intent behind such an order by the Bombay High Court was to bring in more transparency and removing the confusion on the subject.
Disclaimer: This legal update is meant for informational purpose only. It does not constitute any legal opinion and/or advice in any manner. This update is not intended to address the circumstances of any particular individual or corporate body. There can be no assurance that the judicial/ quasi-judicial authorities may not take a position contrary to the views mentioned herein. Readers should seek legal advice prior to acting upon any of the information provided herein.